Is Apple Well Positioned for the Future?

With shares of Apple (NASDAQ:AAPL) trading around $546, is AAPL an OUTPERFORM, WAIT AND SEE, or STAY AWAY? Let’s analyze the stock with the relevant sections of our CHEAT SHEET investing framework.

T = Trends for a Stock’s Movement

Apple designs, manufactures, and markets mobile communication and media devices, personal computers, portable digital music players, and a variety of related software, services, peripherals, networking solutions, third-party digital content, and applications. The company’s products and services feature the iPhone, iPad, Mac, iPod, Apple TV, a portfolio of consumer and professional software applications, the iOS and OS X operating systems, iCloud, and further accessory, service, and support offerings. Apple also delivers digital content and applications through its iTunes, App, iBook, and Mac App stores.

Apple’s request for a stay order requiring an external compliance monitor pending the company’s appeal was denied by a court on Monday. The bid was ruled out by U.S. District Judge Denise Cote in Manhattan, who said, “I want the monitorship to succeed for Apple.” According to the judge, there was nothing inappropriate in the declaration filed by the lawyer Michael Bromwich, who has been appointed as the monitor in the case.

Apple has been demanding the disqualification of the monitor on the basis of the declaration. Cote, in her statement, said she would announce her decision shortly with the proper reason, and Apple will get 48 hours to bid for an emergency stay from the federal appeals court in New York. Last year, in July, Apple was accused of conspiring with five publishers to increase the price of e-books. Books that were available on Amazon for $9.99 inflated to $12.99 or $14.99 as a result of back-room discussions. The five publishers that were allegedly involved with Apple are Hachette Book Group, Macmillan, News Corp’s HarperCollins, Pearson, Penguin Group, and Simon & Schuster.

T = Technicals on the Stock Chart Are Mixed

Apple stock has struggled to make significant progress in the last several quarters. The stock is currently surging higher and looks set to continue this path. Analyzing the price trend and its strength can be done using key simple moving averages. What are the key moving averages? The 50-day (pink), 100-day (blue), and 200-day (yellow) simple moving averages. As seen in the daily price chart below, Apple is trading between its rising key averages, which signals neutral price action in the near-term.


Source: Thinkorswim

Taking a look at the implied volatility (red) and implied volatility skew levels of Apple options may help determine if investors are bullish, neutral, or bearish.

Implied Volatility (IV)

30-Day IV Percentile

90-Day IV Percentile

Apple options




What does this mean? This means that investors or traders are buying a very significant amount of call and put options contracts as compared to the last 30 and 90 trading days.

Put IV Skew

Call IV Skew

February Options



March Options



As of Tuesday, there is average demand from call and put buyers or sellers, all neutral over the next two months. To summarize, investors are buying a very significant amount of call and put option contracts and are leaning neutral over the next two months.

On the next page, let’s take a look at the earnings and revenue growth rates and the conclusion.

E = Earnings Are Mixed Quarter Over Quarter

Rising stock prices are often strongly correlated with rising earnings and revenue growth rates. Also, the last four quarterly earnings announcement reactions help gauge investor sentiment on Apple’s stock. What do the last four quarterly earnings and revenue growth (Y-O-Y) figures for Apple look like and more importantly, how did the markets like these numbers?

2013 Q3

2013 Q2

2013 Q1

2012 Q4

Earnings Growth (Y-O-Y)





Revenue Growth (Y-O-Y)





Earnings Reaction





Apple has seen decreasing earnings and increasing revenue figures over the last four quarters. From these numbers, the markets have had mixed feelings about Apple’s recent earnings announcements.

P = Average Relative Performance Versus Peers and Sector

How has Apple stock done relative to its peers – Google (NASDAQ:GOOG), Microsoft (NASDAQ:MSFT), and BlackBerry (NASDAQ:BBRY) — and sector?






Year-to-Date Return






Apple has been an average relative performer, year to date.


Apple strives to provide innovative products and services that consumers and companies love to own. The company’s request for a stay order requiring an external compliance monitor pending the company’s appeal was denied by a court on Monday. The stock hasn’t made significant progress in the last several years — however, it’s currently surging higher. Over the last four quarters, earnings have been decreasing while revenues have been rising, which has produced mixed feelings among investors. Relative to its peers and sector, Apple has been an average year-to-date performer. WAIT AND SEE what Apple does in the coming weeks.

Using a solid investing framework such as this can help improve your stock-picking skills. Don’t waste another minute — click here and get our CHEAT SHEET stock picks now.

More from Wall St. Cheat Sheet: